Tuesday, April 7, 2015

Spectre of Grexit back as cash runs out

by Ferdinando Giugliano

Financial TimesApril 7, 2015

“Grexit” is the phrase once again on everyone’s lips in Europe.

Even if Greece is able to pay back a €450m loan to the International Monetary Fund on Thursday, it will struggle to make the big repayments due over the next few weeks unless it strikes a deal with its eurozone partners, raising the spectre of default and, ultimately, the departure from the single currency that haunted Europe for much of 2012.

“Grexit” is a concise term for a process that may be anything but swift and clear-cut. Lawyers and economists warn that any Greek detachment from the single currency union would probably be a great deal more complex and messier than previously thought.

“There is a lot of loose talk, but there are no mechanisms for forcing Greece to exit the euro — and they don’t seem to want to exit voluntarily,” says Benedict James, a partner at Linklaters, a law firm. “What is more likely is that the government will progressively run out of euros.”

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This blog is dedicated to the understanding of the current Greek (but also European) economic, political and institutional crisis. It was created by Prof. Aristides Hatzis of the University of Athens, after many requests by his students who seek a source of reliable analysis on the Greek current affairs. Its aim is to post commentary and reports published mainly in the major U.S. and European media and to encourage a rigorous discussion.